Allocating Affordable Housing for
Opportunity
A Case Study of Tax Credit Housing Projects in Metropolitan Milwaukee
By
Kenneth A. Smith Jr. M.S. Candidate, Urban & Regional Planning
MPA Candidate, LaFollette School of Public Affairs
Professional Planning Report A Degree Requirement for Master of Science, Urban and Regional Planning
Department of Planning and Landscape Architecture
Spring 2018
©MMXVIII, the author.
All rights reserved.
The Department of Planning and Landscape Architecture is a teaching and research department
of the University of Wisconsin–Madison. The department takes no stand on planning issues;
opinions expressed in these pages reflect the views of the author.
The University of Wisconsin–Madison is an equal opportunity and affirmative-action educator and employer.
We promote excellence through diversity in all programs.
Table of Contents
List of Tables ................................................................................................................................. iv
List of Figures ................................................................................................................................ iv
Foreword ..........................................................................................................................................v
List of Abbreviations & Glossary .................................................................................................. vi
Executive Summary ...................................................................................................................... vii
Introduction ......................................................................................................................................1
LIHTCs ............................................................................................................................................2
Defining 'Concerted Community Revitalization Plans' ...................................................................4
(Racialized) Concentrations of Poverty & Jurisprudence ................................................................5
Optimizing LIHTC Placemet for Opportunity .................................................................................6
Origin of & Opposition to 'Moving to Opportunity' ........................................................................7
Method & Limitations……………………………………………………………………………10
Results……………………………………………………………………………………………12
Discussion………………………………………………………………………………………..17
Conclusion .....................................................................................................................................19
Works Cited ...................................................................................................................................21
iv
List of Tables
Table 1. WHEDA LIHTC Projects in Milwaukee MSA by County…………………………….13
Table 2. Sum of WHEDA Family LIHTC Projects per School District Ranked by Quality.…...17
List of Figures
Figure 1. Milwaukee Metropolitan Statistical Area in Wisconsin………………………………...2
Figure 2. The Germania Building in Downtown Milwaukee………………………..…….. ….….4
Figure 3. WHEDA LIHTC Projects in Milwaukee MSA by Municipality and County.………...12
Figure 4. WHEDA LIHTC Projects per 1,000 People by County in Milwaukee MSA…............13
Figure 5. WHEDA LIHTC Projects by Census Tract Median Income….. ..... ……. ……............14
Figure 6. WHEDA LIHTC Projects by Census Tract Percentage Non-White ……. ……............15 Figure 7. WHEDA LIHTC Projects by Quality of School District..……….. . ……. ……............16 Figure 8. Former Wildenberg Hotel at 3447 S. 27
th Street..……….. .............. ……. ……............19
v
Dr. Harvey M. Jacobs
Professor of Urban and Regional Planning
Foreword
This paper is the fruit of over a year’s worth of work and learning. It began from
curiosity to take Kurt Paulsen’s housing policy class and continued into an internship with the
Wisconsin Housing and Economic Development Authority (WHEDA) doing research for their
commercial lending group. The internship sustained my intellectual curiosity which led me to
continue research of which some I had done for WHEDA.
I owe my thanks to many individuals who have helped me get to where I am. In the
LaFollette School I gained skills in improved display of research in an evidence-based
policymaking class with Hilary Shager. Kurt Paulsen taught me the basics of housing policy,
providing helpful suggestions, and advising on where to collect and organize data. Working for
WHEDA, Dave Ginger was patient with my many questions and ever supportive with my
internship being an educational opportunity. My advisor, Harvey Jacobs, provided strong
editorial input which bolstered the direction and fortitude of my writing.
Lastly, with the GIS mapping and data sorting, I would have been lost were it not for the
excellent and generous help I received. Credit for this goes particularly to Ciarra Miller, but also
to Matt Miller, Logan Dredski, Tom Pearce, Gillian Cooper, and Jaime Martindale.
With the great help I received I hope I am able to make a small contribution toward
bettering society and living the Wisconsin Idea by using the knowledge of the university to
benefit the entire state. Forward!
Ken Smith
Madison, Wisconsin
April 2018
vi
List of Abbreviations & Glossary:
AMI – Area Median Income, the median household income in a community or metro
CCRP – Concerted Community Revitalization Plan, mandated in Section 42 of the IRC
and states LIHTC QAPs must be part of one
CSA – Combined Statistical Area, comparative measure used by the United States
Census Bureau, includes multiple MSAs
CT – Census Tract
• A territory designated and used by the United States Census Bureau, ideally
following geographic boundaries and containing approximately 4,000 people, to
compare groups of people across space. CTs are an important element to the
decennial census.
FHA – Fair Housing Act, Title VIII of the federal Civil Rights Act of 1968
HFA – Housing Finance Authority
• State agency which allocates federal low-income housing tax credits, often
among other duties
HUD – United States Department of Housing and Urban Development
IRC – Internal Revenue Code, managed by the Internal Revenue Service
LIHTC – Low-Income Housing Tax Credit (federal), some states have their own version
MSA – Metropolitan Statistical Area, comparative measure used by the United States
Census Bureau. Typically contains multiple municipalities and counties.
MTO – Moving to Opportunity.
• The idea to essentially fight poverty by dispersing it across a city or metro
QAP – Qualified Allocation Plan
• The terms and standards by which developers may apply to HFAs for tax credits
QCT – Qualified Census Tract
• Defined by Section 42 as HUD-designated census tracts containing at least 50%
of households with an income less than 60% of the area median gross income
Section 8 Housing Voucher
• A voucher given to eligible individuals based on funding which allows an
individual to live in any rental unit up to a price threshold, assuming landlord
approval, and the individual will pay no more than 30% of his/her income with
the federal government paying the rest
Section 42 – A section in the federal IRC which authorizes the federal low-income
housing tax credit, created in 1986.
WHEDA – Wisconsin Housing and Economic Development Authority.
• Wisconsin’s housing finance authority. WHEDA allocates federal low-income
and new market tax credits and also helps first time homebuyers acquire loans
vii
Executive Summary
There are two prevailing philosophies in fighting housing-based poverty. One argument
suggests policy should deconcentrate poverty, while the other believes more resources should be
established in impoverished areas. This paper examines how the issue has played out in the
Wisconsin Housing and Economic Development Authority’s (WHEDA) allocation of federal
low-income housing tax credits in metropolitan Milwaukee.
I compiled data from WHEDA, the federal Department of Housing and Urban
Development, and the US Census Bureau using ESRI’s ArcMap geographic information system
software to map and join data. I analyzed the location of tax credit projects relative to
socioeconomic indicators of opportunity like wealth and racial concentrations of census tracts,
and project locations relative to quality school districts.
My findings show that to date the vast majority of these projects have clustered in the city
of Milwaukee’s minority-concentrated and poorest census tracts generally outside of what
WHEDA and the Wisconsin Department of Public Instruction consider higher quality school
districts. Affordable family projects in the rest of the metropolitan region are relatively scarce,
with the suburbs generally only willing to accept low-income elderly projects. While the reasons
for the status quo are many, if policymakers wish to deconcentrate poverty, this mapping
suggests more policy incentives ought to be put in place at the state and local level to have
dispersal come to fruition.
1
Introduction
In Evicted, Matthew Desmond persuasively argues, “Affordable housing is a human-
capital investment, just like job programs or education, one that would strengthen and steady the
American workforce.”1 In the spirit of Maslow’s hierarchy of needs and as demonstrated in
Desmond’s work, it is difficult for someone to maintain employment or undertake education if
where one will sleep in the evening is uncertain.2 Therefore, one way local and state
governments can improve the lives of the working poor and develop their communities is careful
consideration on placement of federal low-income housing tax credit (LIHTC) projects.
Placement either in opportunity areas with quality schools, jobs, and surroundings; or
redeveloping areas which are part of a well-defined redevelopment plan, could place lower-
income individuals in quality affordable housing close to work and quality schools. Those of
lesser means would then have more time to be with their families or work which may aid income
mobility and improve the community as a whole.
In 2015 the US Supreme Court affirmed disparate impact claims under the Fair Housing
Act (FHA). State housing finance authorities (HFAs) must balance fair housing concerns of
dispersing subsidized housing with community development concerns targeting aid to
disinvested areas. Subsidized housing in areas of higher segregation or poverty may otherwise
reduce household income-mobility and expose residents to worse crime and health outcomes.
This paper examines two conflicting objectives inherent to LIHTC allocation: placement
in 1), impoverished or revitalizing neighborhoods or 2), areas of greater opportunity. The paper
focuses on the spatial allocation of LIHTC projects in metropolitan Milwaukee allocated by
Wisconsin’s HFA, the Wisconsin Housing and Economic Development Authority (WHEDA).
1 Matthew Desmond, Evicted: Poverty and Profit in the American City,” (New York: Crown Publishers, 2016) 310.
2 Ibid., 308-313.
2
My mapping shows that since the LIHTC’s 1987 implementation, the allocation of family
LIHTC units have predominated in non-high achieving school districts, are clustered in the city
of Milwaukee, and are in census tracts higher in poverty and concentration of racial minorities.
While the results are clear the reasons for them are numerous.
Figure 1: Milwaukee Metropolitan Statistical Area in Wisconsin
LIHTCs
Congress created the LIHTC program in 1986 as a market-based, poverty-reducing
strategy dedicated to increasing the supply of quality affordable housing to households making
no greater than 30 percent of the area median income. The subsidies provided by the credits
allow below-market rents for qualified tenants. Section 42 of the federal Internal Revenue Code
3
authorizes LIHTCs and directs the program’s administration to the Internal Revenue Service
(IRS). State HFAs competitively allocate the credits annually to developers based on a qualified
allocation plan (QAP), unique to every state. Impoverished qualified census tracts (QCTs) have
statutory preference for LIHTC allocation.
Section 42 also requires HFAs to have “concerted community revitalization plans”3
(CCRPs) to reduce poverty but has not defined the term, leaving broad room for HFAs’
interpretation. In 2012 most HFAs had merely copied the Section 42 language in their QAPs
while few specified definitions and requirements for targeted credit allocation.
The result has often been placement of LIHTCs in areas where market rate rents are
comparable to subsidized LIHTC rents and also near properties readily accepting Section 8
vouchers. Where this occurs, it may defeat the intended purpose of subsidized housing by
perpetuating concentrations of poverty which often are far from employment opportunity areas
and outside of quality school districts. To more effectively allocate LIHTCs, planners,
municipalities, and HFAs might consider how they influence project placement. Particularly, it
may depend on how HFAs define CCRPs.4
3 § 42(m)(1)(B)(ii)(III) IRC
4 Jill Khadduri, “Creating Balance in the Locations of LIHTC Developments: The Role of Qualified Allocation Plans,” Poverty & Race Research Action Council, February 2013 <http://www.prrac.org/pdf/Balance_in_the_Locations_of_LIHTC_Developments.pdf> 7, 10-14; Jill Khadduri, “Concerted Community Revitalization in Qualified Allocation Plans,” Abt Associates, November 28, 2012 <http://www.prrac.org/pdf/Concerted_Community_Revitalization.pdf>.
4
Figure 2: The Germania Building in Downtown Milwaukee,
Rehabilitated in part with LIHTC
Source: WHEDA
Defining ‘Concerted Community Revitalization Plans’
To date the IRS has not defined CCRPs. In February 2017 the IRS requested public input
on criteria for a CCRP definition. Fair housing advocates argued for a formal IRS definition
while the National Council of State Housing Agencies opposed formal definition due to concerns
about a ‘one size fits all’ approach. Yet, the Council adopted as a recommended practice the
following language which is functionally similar to housing advocates’ definitions:
• Is geographically specific and provides a clear direction for implementation • Includes a strategy for obtaining commitments of public and private investment in non-housing
infrastructure, amenities, or services beyond the Credit development;
• Demonstrates the need for revitalization; and
• Includes planning document elements such as setting goals for outcomes, identifying barriers to
implementation, establishing timelines and benchmarks, and identifying community partners.5
5 NCSHA, “NCHSA Recommended Practices in Housing Credit Administration,” December 2017.
5
While the burden of implementing this definition is on HFAs, municipalities could also influence
the LIHTC placement in their territories.6
(Racialized) Concentrations of Poverty & Jurisprudence
Midwestern and Northeastern metropolitan areas typically have higher segregation rates
of LIHTC projects. This may be a product of these regions’ greater municipal fragmentation.
Big cities across the US possess the bulk of LIHTC allocations with 46% of all projects and 51%
of all units. From 1995 to 2006, 35% were located in high poverty census tracts. By race, in
2006 only 32% of total American rental units were in majority-minority census tracts while 44%
of LIHTC units were. LIHTCs generally have higher minority concentrations than all US rental
units. However, LIHTC projects are generally less racially concentrated than public housing and
other federal housing subsidies. Nonetheless, criticisms remain that LIHTCs sustain racial and
economic segregation through placement in poorer and racially-concentrated census tracts.7
The argument against allocation in racially concentrated areas is that people there
generally have fewer opportunities for upward mobility and lower education quality while being
subject to more crime, poorer health outcomes, and costlier food. A 2000 amendment to Section
42 later directed HFAs to favor qualifying census tracts (QCTs), which by definition are
impoverished. LIHTC accumulation in an area may concentrate poverty and subsequently
minorities which may constitute a civil rights violation by ghettoizing minorities.8
6 Internal Revenue Service, Notice 2016-77, The Service, 2016; Letter from Enterprise Community Partners to IRS, February 10,
2017; Khadduri 2013; National Council of State Housing Agencies, “RE: Notice 2016-77, Satisfying the Required QAP Preference in Section 42 (CCRP Plans), February 10, 2017; NCSHA, “NCSHA Recommended Practices in Housing Credit Administration,” the council, December 2017; IRS PRRAC 2017; Philip Tegeler, Poverty & Race Research Action Council et al, Letter to Internal Revenue Service regarding Notice 2016-77, February 10, 2017. 7 Alex F. Schwartz, Housing Policy in the United States, Third Edition, (New York: Routledge, 2015) 146-148.
8 Myron Orfield, “Racial Integration and Community Revitalization: Applying the Fair Housing Act to the Low Income Housing Tax Credit,” Vanderbilt Law Review 58:6, November 2005, 1760-1761, 1782-1783; United States Department of Housing and Urban Development, “Qualified Census Tracts and Difficult Development Areas,” accessed August 9, 2017 <https://www.huduser.gov/portal/datasets/qct.html>.
6
A 2004 New Jersey Superior Court case found HFAs must simultaneously invest in
economically depressed and non-depressed areas while not to creating a racial disparate impact.
And the Supreme Court in 2015 found ‘disparate impacts’ litigable with limits under the FHA,
while cautioning, “The FHA is not an instrument to force housing authorities to reorder their
priorities. Rather the FHA aims to ensure that those priorities can be achieved without arbitrarily
creating discriminatory effects or perpetuating segregation.”9 However, the decision has
essentially not changed the legal landscape.10
Optimizing LIHTC Placement for Opportunity
Scholarship regarding LIHTC placement generally focuses on desegregation and access to
quality education. However, there is some research on more effectively allocating LIHTCs.
This research suggests HFAs ought to analyze their QAPs and placement locations to establish
new goals and define CCRPs in a way that LIHTC allocation in QCTs creates opportunity.
Conditions in each state are generally unique. In 2013 interviews with officials from various
states found unique conditions per state. Pennsylvania’s low-income preference counteracted its
opportunity area preference, while in Massachusetts it was generally cheaper to build affordable
housing in the suburbs. Other states found alternative forms of gap financing for areas which
may not qualify for other funding.
9 Superior Court of New Jersey, In Re Adoption of the 2003 Low Income Housing Tax Credit Qualified Allocation Plan, A-0109-
03T3, April 28, 2004; 576 US, Texas Department v. Inclusive Communities (2015) Et Al, Certiorari to the United States Court of Appeals for the Fifth Circuit, No. 13-1371, June 25, 2015., 18. 10
Courtney Lauren Anderson, “Affirmative Action for Affordable Housing,” Howard Law Journal 60:1 (2016) 126-131; 576 US, Texas Department v. Inclusive Communities (2015), 10-22; Rigel C. Oliveri, “Disparate Impact and Integration: With TDHCA v. Inclusive Communities the Supreme Court Retains an Uneasy Status Quo,” Journal of Affordable Housing & Community Development Law, 24:2 (2015) 267-286;
7
Questions to Consider on LIHTC Allocation
1. How does the QAP predispose placement in the structure of its requirements within the
state’s political, economic, and regional environment(s)?
2. Does the QAP bias allocation in urban, suburban, or rural areas?
To further goals of dispersing concentrated poverty, scholarship suggests the following:
• Limit priorities for LIHTC developments in low-income neighborhoods to those that have neighborhood
revitalization efforts with a real chance of success.
• Limit incentives that lock in the historical geography of affordable housing.
• Create incentives for locating projects in high-opportunity neighborhoods.
• Change QAP provisions that block projects from being developed in high-opportunity neighborhoods.11
To achieve these goals the literature argues it is imperative for HFAs to have detailed CCRP
definitions for developers and municipalities to follow.
Something to consider is whether LIHTCs should be placed in impoverished areas at all,
effective CCRP or not. Are CCRPs effective at combatting poverty? Is the best solution LIHTC
dispersal? More research is needed but the courts require balancing both options. Planners and
other municipal officials can examine the unique characteristics of their locales and states to
determine what may aid better outcomes and accordingly influence developers and their HFA.
While this paper is fundamentally oriented around ‘moving to opportunity’ (MTO), this
approach has its critics.12
Origin of & Opposition to ‘Moving to Opportunity’
The idea of dispersing poverty concentrations goes back to the 1950s, pre-dating LIHTC.
In 1965 Congress authorized the Section 23 Scattered Site program to lease private homes and
townhouses to public housing recipients. During the 1960s-1970s HUD pressured metropolitan
11
Khadduri 2013, 10. 12 Khadduri 2012, 4-7; Khadduri 2013, 8-17.
8
regions to accept their ‘fair share’ of the poor however suburban opposition led President
Richard Nixon and Congress to take no action and even restrict HUD.
Developments occurred from the 1966 Supreme Court case Dorothy Gautreax v. Chicago
Housing Authority. The case’s focus accused the Chicago Housing Authority of segregating
public housing in areas of racial and poverty-concentration. The CHA under court order later
allocated federal Section 8 housing vouchers to 7,500 eligible Black families. A 1998 scholarly
analysis suggested generally positive results. In 1992 Congress codified MTO in the Housing
and Community Development Act based on Gautreax. A key difference in the legislation was its
focus on poverty and not race.
The federal HOPE VI program bears mentioning as well. Due to distress in many public
housing projects from inadequate funding, Congress in 1992 passed the program pushing toward
ending public housing towers and deconcentrating poverty by creating mixed use and income
projects. However, it essentially became a demolition program vastly reducing the number of
affordable units across the country and drastically in many cities. Hartford, Connecticut;
Memphis, Tennesee; St. Petersburg, Florida; and Detroit demolished over 50% of their public
housing. Chicago leveled over 16,000 units, more than all other housing authorities’ portfolios
except New York City. Milwaukee demolished a relatively modest 16% of its units.13
Despite an emphasis for around 50 years, MTOs’ results have varied. Xavier de Souza
Briggs et al’s Moving to Opportunity: The Story of an American Experiment to Fight Ghetto
Poverty found mixed results when examining MTO’s first 15 years. They described MTO as a
13
Edward G. Goetz, Clearing the Way: Deconcentrating the Poor in Urban America, (Washington, DC: The Urban Institute Press, 2003) 45-63; Edward G. Goetz, New Deal Ruins: Race, Economic Justice, and Public Housing Policy, (Ithaca, NY: Cornell University Press, 2013) 68-72.
9
“strong idea-weakly implemented”14
which could be more successful if MTOs include
counseling to address issues such as education and jobs. They also argued MTO is ineffective
without substantial additions of affordable housing to the rental market.15
More recent studies have also examined MTO efficacy. Ludwig et al (2013) found gains
for young and adult females in terms of life quality based on speculation that more affluent areas
engender less stress. Surprisingly, the researchers found no drop in violent crime arrests and
young and adult males showed no improvement and even decline.
More positively, Chetty et al’s longitudinal study (2016) found the neighborhood effects
of poverty or lack thereof as critical to child development. MTO had no effect on adult incomes
but children aged less than 13 who moved to opportunity showed large gains. Those children
averaged income gains of 35% when older, improved attainment of higher education entry and
quality, and increased likelihood of marriage before establishing families. The paper also
suggested those who moved out of poverty areas passed their gains on to the next generation.16
MTO is not without critics from both sides of the political spectrum. Suburbs, usually
conservative and dominated almost exclusively by White Americans, have generally resisted any
form of low-income housing based on racist, classist, and/or not-in-my-backyard (NIMBY)
attitudes. Since most Americans concentrate their wealth in real estate, the latter explanation
may often result from homeowners’ risk averseness to perceived threats to home values. This is
in spite of a 2002 study of Madison, Wisconsin and Milwaukee which found the effect of
14
Michael B. Katz, The Undeserving Poor: America’s Enduring Confrontation with Poverty, 2nd Ed, (New York: Oxford University Press, 2013) 249. 15 Ibid., 248-250. 16 Jens Ludwig et al “Long-Term Neighborhood Effects on Low-Income Families: Evidence from Moving to Opportunity,” American Economic Review 103:3, 2013, p.226-231; Raj Chetty, Nathaniel Hendren, and Lawrence F. Katz, “The Effects of Exposure to Better Neighborhoods on Children: New Evidence from the Moving to Opportunity Experiment,” American Economic Review 2016,106:4, p.855-902.
10
subsidized properties on surrounding values relied upon the status of the surrounding
neighborhood, such as whether the neighborhood was declining.
An example from metropolitan Milwaukee is the suburb of New Berlin. In 2010 that city
permitted construction of 80 affordable multifamily and elderly units near its library. However,
that July its Plan Commission revoked consent due to popular backlash with overt racial
remarks. New Berlin eventually permitted the project under threat of a federal Department of
Justice lawsuit.17
Meanwhile on the far-left scholars such as Marxian David Imbroscio (2008) have argued
that too much of the conversation focuses on removing people from poor areas and not creating
options to remain in place if desired. Public housing residents in places such as Chicago, New
Orleans, and Atlanta bitterly opposed their involuntary dispersal when their cities razed their
homes. However these cases and arguments do not apply to LIHTC as residency in these
subsidized units is based on individual desire.18
Method & Limitations
I mapped the locations of WHEDA projects using ESRI’s ArcMap geographic
information system (GIS) software. The locus of analysis is the metropolitan statistical area
(MSA) of Milwaukee defined by the Census Bureau to include Milwaukee, Ozaukee,
Washington, and Waukesha counties.
17
William A. Fischel, The Homevoter Hypothesis: How Home Values Influence Local Government Taxation, School Finance, and Land-Use Policies, (Cambridge, MA: Harvard University Press, 2001) 5, 10-11, 14; Goetz 2003, 63-67; Mike Johnson, “New Berlin, feds settle housing suit,” Milwaukee Journal Sentinel, April 10, 2012 <archive.jsonline.com/news/Waukesha/new-berlin-feds-settle-discrimination-lawsuit0aa4uj98-146923945.html/>; Jill Khadduri, Kimberly Burnett, and David Rodda, “Targeting Housing Production Subsidies: Literature Review,” US Department of Housing and Urban Development, December 2003, 59-59. 18 Goetz 2013, 86-110.
11
I gathered census data from the 2016 American Community Survey (ACS), and both
HUD’s and WHEDA’s records of LIHTC properties in metropolitan Milwaukee. The records on
LIHTC projects are not exact and required cleaning up. The HUD data did not distinguish
between senior and multifamily units and did not overlap perfectly with WHEDA’s numbers. I
discovered some errors or ambiguous records from HUD and WHEDA which required further
investigation, such as when a property was designated as low-income but did not specify its type.
I classified purely permanent supportive housing projects as ‘multifamily’ for this analysis. The
numbers are not perfect and should be taken as approximations.
For shape files, I downloaded the Census Bureau’s file of all American counties, the
Wisconsin Legislative Technology Service Bureau’s file for all Wisconsin towns and
municipalities, and the Wisconsin Department of Public Instruction’s (DPI) file for school
districts.
I joined the shape files with data from the 2016 ACS and joint HUD/WHEDA data.
HUD’s data provided the geospatial coordinates. With the joined data I examined the number of
WHEDA projects by county, school district, and municipality. I only created tables normalizing
by county and school district as the data ArcMap produced for me did not add up for
municipalities, this may be from my error. The school district quality was three or five points
which WHEDA assigns to applicant-properties within quality school districts from DPI ratings.
12
Results
Figure 3: WHEDA LIHTC Projects in Milwaukee MSA by Municipality and County
13
14
Figure 5: WHEDA LIHTC Projects by Census Tract Median Income
15
Figure 6: WHEDA LIHTC Projects by Census Tract Percentage Non-White
16
Figure 7: WHEDA LIHTC Projects by Quality of School District, Based on WI DPI Ratings
17
Discussion
The disparity in allocation of multifamily is evident from Figures 2 to 7 and the two
tables. Family projects are concentrated in the city of Milwaukee’s areas of greatest minority
concentration and poorest census tracts. The suburban counties do not have as many projects per
capita as Milwaukee County with Waukesha possessing a quarter per capita of Milwaukee’s
18
numbers. That includes all projects. Furthermore, the vast majority of projects are placed in
school districts WHEDA does not assign point incentives in its QAP.
The placement of projects in poorer census tracts does fulfill the statutory objectives of
Section 42. However, if the objective is to create better long-term outcomes through placement
in more affluent areas with better schools, allocation could use improvement.
WHEDA incentivizes developers in its QAP to build projects near job centers, in
wealthier areas, and in better school districts. However, WHEDA can only allocate its credits
based on the developers who apply and the quality of the developers’ applications. Likewise,
Wisconsin only receives around $13 million annually in LIHTCs and may not have had
opportunity incentives since LIHTC’s inception.
One must also remember that suburbs, while more tolerant to low-income senior units,
generally resist apartments, especially low-income family ones. The New Berlin example is
illustrative but not unique except for its federal intervention. Milwaukee County’s North Shore
suburbs except Brown Deer notably have no projects, nor does urbanized West Milwaukee.
Through incentives and persuasion, municipalities, the region, WHEDA, and the
Wisconsin government could sway developers to build projects in opportunity areas along transit
corridors and by good schools. Metropolitan unity or minimally cooperation could address the
issue. However, many exurbs would not presently be logical for placement of projects as quality
public transportation lacks west of Brookfield and north of Milwaukee County. The city of
Milwaukee could also encourage LIHTC construction on its south side between its southern
inner-ring suburbs.
For example, project locations on or near South 27th
Street between West Oklahoma and
College Avenues would place tenants near the good Greendale, Franklin, and Oak Creek school
19
districts, and along a major transit corridor linking nearby job centers like St. Luke’s Hospital,
the businesses on the former Southgate Mall site, and the numerous businesses along 27th
Street
southward into Franklin.
One potential site is the former Wildenberg’s Evergreen Hotel. Assuming proper zoning,
a developer could rehabilitate the historic building as a mixed-use or residential project while
building affordable housing on the rest of the property. As a city-owned property, it merely
requires political will and a willing developer.
Figure 8: Former Wildenberg Hotel at 3447 S. 27
th Street
Source: City of Milwaukee
Conclusion
This paper shows the spatial reality of WHEDA’s allocation of housing tax credits.
LIHTC projects in the Milwaukee MSA have been localized in the city of Milwaukee’s poorest
and most racially concentrated census tracts. This paper also highlights the importance of where
LIHTC projects allocated based on proximity to job centers, transit routes, and good schools.
These are really the factors that lead to LIHTC projects affecting poverty reduction beyond
reducing rent burdens.
20
Planners and other municipal officials can use this knowledge to influence municipal
support of LIHTC projects based on proposed locations. Planners and their municipalities may
also influence their HFAs and state legislatures to push for policies which have better outcomes
from LIHTC allocations. More effective workforce housing also stands as an economic
development tool serving not only to improve the lives of many families, but to also improve the
economy of southeast Wisconsin.
21
Works Cited
Anderson, Courtney Lauren. “Affirmative Action for Affordable Housing.” Howard Law
Journal. 60:1, 2016.
Chetty, Raj, Nathaniel Hendren, and Lawrence F. Katz. “The Effects of Exposure to Better
Neighborhoods on Children: New Evidence from the Moving to Opportunity
Experiment.” American Economic Review. 106:4, 2016.
Deng, Lan. “Comparing the Effects of Housing Vouchers and Low-Income Housing Tax Credits
on Neighborhood Integration and School Quality.” Journal of Planning Education and
Research 27:1. September 2007.
Department of Housing and Urban Development, United States. “Qualified Census Tracts and
Difficult Development Areas.” Accessed August 9, 2017
<https://www.huduser.gov/portal/datasets/qct.html>.
Enterprise Community Partners. Letter to IRS. February 10, 2017.
Fischel, William A. The Homevoter Hypothesis: How Home Values Influence Local
Government Taxation, School Finance, and Land-Use Policies. Cambridge, MA:
Harvard University Press, 2001.
Florida, Richard The New Urban Crisis: How Our Cities Are Increasing Inequality, Deepening
Segregation, and Failing the Middle Class – And What We Can Do About It. New York:
Basic Books, 2017.
Goetz, Edward G.
Clearing the Way: Deconcentrating the Poor in Urban America. Washington, DC: The
Urban Institute Press, 2003.
New Deal Ruins: Race, Economic Justice, and Public Housing Policy. Ithaca, NY:
Cornell University Press, 2013.
Internal Revenue Service, United States. “Notice 2016-77.” The Service, 2016.
Mike Johnson, “New Berlin, feds settle housing suit.” Milwaukee Journal Sentinel. April 10,
2012. <archive.jsonline.com/news/Waukesha/new-berlin-feds-settle-discrimination-
lawsuit0aa4uj98-146923945.html/>.
Katz, Michael B. The Undeserving Poor: America’s Enduring Confrontation with Poverty. 2nd
Edition. New York: Oxford University Press, 2013.
22
Khadduri, Jill.
“Concerted Community Revitalization in Qualified Allocation Plans.” Abt Associates.
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